If you are considering buying a franchise, the disclosure document is a key part of the process that aims to ensure prospective franchisees can make an informed business decision.

Under the Franchising Code of Conduct, all franchise systems in Australia must maintain a disclosure document, which must be provided to prospective franchisees at least 14 days before entering into a franchise agreement.

The purpose of a disclosure document is to supply key information about the nature of the franchise system and to help the franchisee make an informed business decision about entering the franchise.

Despite being tailored to each franchise system, disclosure documents must comply with the Code’s prescribed format. Key elements in a disclosure include:

A WARNING

The warning statement on the first page cautions prospective franchisees that franchising is a serious undertaking. It recommends they obtain independent legal, accounting and business advice, but also highlights their cooling-off rights.

SPECIFIC DATES

Disclosure documents must specify their preparation date and be signed by an officer of the franchisor. Franchisees can reference this date to ensure currency.

Franchisors must update their disclosure document annually within four months of the end of their financial year (with some exceptions). Therefore, franchisors working on a standard July-to-June financial year must complete their update by the end of each October.

FRANCHISOR’S DETAILS

The business experience of the franchisor’s officers and the duration the franchise system has been active in Australia provides an insight to the stature of the system. Prospective franchisees can judge whether the franchisor has a satisfactory level of knowledge and experience in the industry, which is especially important for the new systems.

Breach notices must be taken seriously because failure to act can put your business at risk.

Formal breach notices are generally issued once a dispute escalates and a conciliatory resolution cannot be achieved. However, this is not always the case because some franchisors may resort to issuing a breach notice straight away.

What is a breach notice?

Under the Franchising Code of Conduct (Code), a franchisor is permitted to terminate a franchise agreement if they provide you a breach notice and you fail to remedy your breach in accordance with the requirements of the notice. It is essentially Step 1 in the termination process and used as a formal warning that your business is non-compliant.

A breach notice must:

specify the provision of the franchise agreement which has been breached;

set out what you are required to do to remedy the breach; and

provide a reasonable time for you to remedy the breach.

If the franchisor wishes to rely on the breach notice to terminate the franchise agreement, the notice must also state that the franchisor proposes to terminate the franchise agreement if the breach is not remedied.

If you fully remedy your breach in accordance with the requirements of the breach notice, then the franchisor cannot rely on that breach to terminate your franchise agreement. Otherwise, if you fail to comply with all conditions of the breach notice, the franchisor is entitled to terminate your franchise agreement.

Remember that there are certain circumstances under the Code which entitle a franchisor to immediately terminate a franchise agreement without following the breach notice process, such as fraudulent behaviour.

What should I do?

Receiving a breach notice can be distressing, but don't panic.

You should read the breach notice carefully together with your franchise agreement, and diarise the ...

It took less than a day for the GDPR (also known as the European Union General Data Protection Regulation) to see its first lawsuit.

Coming into force on 25 May 2018, the GDPR is a new regulation aimed at enforcing stricter rules concerning the use of EU resident’s personal information, and on that same day, Austrian privacy activist Max Schrems filed lawsuits against both Facebook and Google for a total of $7.6 billion euro ($11.6 billion AUD) for allegations of coercion by the two companies.

The fines filed in these lawsuits are no doubt a significant amount of money and while most companies will not see fines that high, it is important for all entities which interact with personal information (which includes information such as first name last name as well as digital cookies) of EU residents to be aware of the GDPR.

Some of the main components of the GDPR are:

Privacy by Design: The GDPR requires companies to not only know why they are collecting personal information but also how it is being used and how it is managed. One way to achieve compliance is to have documented policies and procedures in place which details the lifecycle of the personal information collected. This process should also be undertaken each time a new process or system is introduced to the company.

Consent for All Use: Entities must obtain consent for all the contemplated usage. This means that if you have consent to do one activity (such as fulfilling a customer’s online shopping order), consent is not automatically granted to do another activity (such as remarketing ads). This step is easier to obtain compliance if a company has properly documented their data processes and have implemented a Privacy by Design approach.

Right to be Forgotten: In addition to a company’s normal procedure relating to the removal of personal information once it is no longer needed, if an individual requests to be ...

A successful lawyer has to become an expert in negotiation. We thought it was unfair to keep this knowledge to ourselves, so we’ve compiled a handy list of negotiation techniques into SOAP. A good lawyer uses SOAP every day, which is why people think we’re slippery.

Silence

The Four Seasons said it best: ‘silence is golden’. People hate silence and they’ll do anything to fill it, even if that’s not in their best interest. This explains the music of Nickleback. A deliberate silence now and then can help you squeeze extra concessions from your counterparty or gain leverage on a price point.

Beware, though: when using silence in a negotiation, you’ll need a good poker face. Being quiet is only useful if you’re comfortable with being quiet. If you’re as uncomfortable as the person across the table, you won’t get anything from silence other than a large amount of flop sweat.

Outcome

Before you enter a negotiation, take the time to think about your ideal outcome. What would you like to come out of your discussion? What would the other party like? What can you work on together? All too often, people turn up at the negotiating table with no firm idea of what they actually want. This inevitably leads to conflict. It’s like playing water polo with somebody who can’t swim. Sure, it’s fun to watch, but it seems like a waste of time and those floaties aren’t fooling anybody.

Acceptance

Many lawyers will warn you not to say things like “this is my final offer”. Giving yourself an ultimatum limits your ability to negotiate properly. Remember to be flexible. This doesn’t mean that you have to give up completely, but you should be prepared to make concessions. Sometimes the best way forward to take a few steps backwards. We read that in a fortune cookie ...

When you die, you can gift your physical possessions, but you also have an opportunity to pass on your values, attitudes and philosophies.

When considering your Will and Legacy, create opportunities for flexibility and choice (within a structured environment). Too many limitations can exacerbate poor relationships and create unnecessary expense – stay true to your ideals and make practical choices!

1. Gift a Well-Organized Estate

Minimise the time and effort required for others to work out what your legacy is.

a) Consider potential claimants to your estate to ensure your loved ones are not disadvantaged. Take into account any toxic relationships and consider how you can counteract this in your Will and Estate Plan.

b) Enable flexible gifting in well-tested Testamentary Discretionary/Family Trusts to maximize gifts available to people you love, whilst quarantining your estate from the risk of bankruptcy, poor money management or undue pressure.

c) Empower Trustees to invest in a long-supported charity. By establishing and/or ...

Looking to buy? It doesn’t matter if it’s your first home, an investment or if you have done it a dozen times, it’s a big deal.

Here are the top five things you can do to ensure your purchase runs as smoothly as possible:1. Forward us a copy of the Contract before you sign:
It is extremely important that you know your rights under the Contract and the critical dates and conditions contained in it. We normally suggest inserting building and pest, finance and due diligence conditions into your Contract so you will have time to research the property to be completely satisfied with your purchase and make an informed decision as to whether to proceed or not. The usual timeframe you have to satisfy these conditions is 7–14 days.2. Talk to your bank or mortgage broker
Ideally, you should talk to your bank or mortgage broker before you start looking for a property. This will give you an idea of your borrowing capacity and purchase price range. Once you sign the Contract, get a copy to your bank or broker immediately so they can start the unconditional approval process. This usually involves the bank doing a valuation of the property and you meeting and satisfying other loan conditions. As mentioned earlier, most Contracts have “subject to finance” conditions which will give you 7-14 days to obtain unconditional approval.3. Book your building and pest inspection
Book your building and pest inspection as soon as possible. You need to know exactly what you are buying and identify if there are any issues with the property you are purchasing.

Is there a pool on the property? If so, ask your agent if a Pool Safety Certificate has issued for the property. If one hasn’t issued the onus may be on you under the Contract to obtain a Pool Safety Certificate.

If your Contract is subject to Due Diligence, we will suggest researching the Council records and obtaining information of current building approvals.

IP Australia, the government agency responsible for administering intellectual property rights and legislation in Australia has released their new search engine for trademarks.

If you are familiar with their previous search engine (ATMOSS), you are in for a treat. The new interface is simpler, more user-friendly and is teeming with new features to help make searches quicker and easier.
What is new?

The layout

The new Quick Search features (in the “I am interested in …” section) now offer helpful tips and descriptions, assisting non-legal people to navigate and understand what and how to conduct appropriate searches.

The search page has also received a facelift bringing it in-line with the rest of IP Australia’s site creating a clean and cohesive website.

Administering searches

The previous search engine required text regardless if your search related to word marks or logos/images. Now, you can search by text or images or even portions of text or portions of images.

If you need to know if the circle in the left-hand corner of your proposed logo is similar to another logo, the new search engine can provide you with these results.

Displaying results

Even before you select search, the new search engine will provide you with the expected number of results. This small feature can help you refine your search and reduce your search time by removing the need for unnecessary clicks.

For example, if you enter a term and you see IP Australia will return over 2000 results, this is a good indication that you should refine your search with additional text (if appropriate).

Class and Status breakdown

Following the trends of big data, IP Australia will now provide a breakdown of information related to the class and status of your search.

For Franchisors: What Are My HR Responsibilities To Franchisee Employees In Australia?
The employee underpayment scandal and subsequent investigation by the Fair Work Ombudsman into retail convenience chain 7-Eleven has prompted the franchise industry to scrutinise the responsibilities franchisors owe to franchisee employees in Australia.
Are franchisors responsible for the actions of franchisees?
Under the Franchising Code of Conduct and under the typical franchise agreement, franchisors are not responsible for the actions of franchisees towards their employees. Franchisors and franchisees are legally and financially independent parties.

In essence, a franchise agreement is an agreement that allows a franchisee to carry on their own independent business in accordance with the franchisor’s model. Franchisees are obliged to run their own business, while at the same time abide by the principles of uniformity of the system regarding the products or services offered in their businesses.

Franchise agreements will commonly provide that franchisees are responsible for complying with industrial relations laws by paying employees the correct award, tax and superannuation.
The 7-Eleven payment scandal case study
In response to the employee underpayment allegations, the franchisor of 7-Eleven established an independent investigation panel, introduced changes to its business model and made commitments to provide compensation to underpaid franchisee employees. The franchisor’s response to the situation might be distinguished from how many other franchise systems might react because the 7-Eleven business model provides a profit share arrangement between the franchisor and its franchisees.

In most franchise systems there is no profit share, but the franchisor receives a regular franchise fee from franchisees, which may be a set royalty or an amount based on the franchisee’s performance. In the usual case, the franchisor is removed from the day-to-day running of the ...

Crooks, watch out! From 12 November 2016, there will be some important new amendments to the Australian Consumer Law and the ASIC Act.

These amendments will expand consumer protections to business owners. Starting in November, small businesses will be protected against ‘unfair’ provisions in contracts.
When Will the New Rules Apply?
There’s a few exceptions, but essentially, the amendments will apply where:

the contract is for the supply of goods or services, or the sale or grant of an interest in land;

at least one party to the contract is a small business at the time the contract is entered into;

the upfront price of the contract is $300,000 or less - or $1 million or less if the length of the contract lasts for more than 12 months;

the contract is a standard form contract; and

the contract is entered into, renewed or varied after 12 November 2016.

The amendments will also apply to contracts for financial services, as well as financial products regulated under the ASIC Act (loans, finance contracts and other credit contracts). For these contract types, interest payable under the contract is not included in the calculation of the upfront price.
What's a Small Business?
A small business is defined as a business with fewer than 20 employees. This is measured by headcount including part-time and casual employees engaged on a 'regular and systemic basis'.
What's a Standard Contract?A standard contract is an agreement where the terms and conditions are set by one party, with limited opportunities for the other to negotiate. A good example of this is your telephone contract. Normally, the contract is offered on a "take it or leave it" basis. (Actually, for phone ...

A growing business will often identify one or more key employees as instrumental in driving the business. These key employees will be a minority in number. In order to retain and provide incentives to these key employees, the founder may wish to provide an equity interest in the business. In doing so, a significant issue can be providing this equity in a tax effective manner.
Employee Share Scheme provisions - Current Law
When faced with this issue, the usual starting point is the specific Employee Share Scheme provisions, currently contained in Division 83A of the Income Tax Assessment Act 1997 (ESS). The main thrust of these provisions is to include in assessable income the discount to market value of the issue price of the interest (shares or options), as demonstrated in the following example.
Example
Jim is the founder of Start-Up Pty Ltd, a company that has been in existence and trading for two years in the IT industry (the same principles apply for businesses in other industries - retail, manufacturing, distribution, professional services, biotechnology). The business has a current market value of $2 million. Jim has identified Peter as a key employee who has been instrumental in doubling the markets of the business in the last six months. Jim would like to issue a 10% equity interest in the business to Peter. His preference is to issue this equity for no consideration. He anticipates the business will be worth in excess of $6 million in five years’ time.

In this case, a 10% interest has a value of $200,000 with a preferred issue price of nil or $1. ESS operates to include the discount ($200,000) in Peter’s assessable income at the time of the interest's issue. This is the case regardless of whether the interest is issued directly to Peter or to an associate.

It might be considered that a means of overcoming this issue would be to consider options with an exercise price equal to the current market value. This ...

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